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April 7, 2016

Lebanon braces itself for US anti-Hezbollah law | Executive Magazine

New legislation in the United States targeting Hezbollah has Lebanese government and banking officials shuttling between Beirut and Washington, not to rush to its defense but to assess the level of damage heading this way.Remembering the forced closure of the Lebanese Canadian Bank in 2011, local officials are more than a little concerned at the prospect of not just one bank as a victim but the entire sector.

Ratified into US law in December, the Hezbollah International Financing Prevention Act (HIFPA) is a continuation of the United States’ war on terrorism, an American policy that dates back to the Bush Administration. It is also a consequence of the P5+1 nuclear agreement with Iran (the Iran deal) and the lifting of that country’s sanctions. Those opposing the Iran deal – Republicans and American allies in the Gulf and Israel – have focused their residual fury at Hezbollah. They fear that the lifting of sanctions against Iran will allow it to float more money and aid to Hezbollah and other proxies in the region.

A pawn in US domestic politics

The Americans allege Hezbollah is a key player in global narcotics trafficking and money laundering networks, using front companies to access local and international banking services to finance its military operations – charges vehemently denied in December’s “show me the evidence” speech by Hezbollah leader Hassan Nasrallah.

Cabinet officials in the Obama Administration and Congress – the Senate plus House of Representatives – both agree on the need to curtail Hezbollah’s access to Lebanese and international financial systems. But the message that the Administration has portrayed – in statements and through meetings with Lebanese government and banking officials of shielding Lebanon’s banking sector and economy does not exactly jive with that of the Congress.

There is not a discrepancy between the White House and Capitol Hill on the question of targeting Hezbollah, says Alain Aoun, a Member of Parliament representing Hezbollah’s ally, the Free Patriotic Movement. He told Executive following February meetings with representatives from both that it’s not yet clear how aggressive the implementation rules will be for the HIFPA. “It’s a question of implementation so as not to provoke any collateral damage – this was the message we [emphasized],” Aoun said.

Shielding Lebanon’s financial institutions, banking sector and economy has been the key point reiterated by Lebanese government and banking officials in trips to Washington. Amal Movement MP Yassine Jaber, another Hezbollah ally, told Executive in early March that the Americans were puzzled by all the meetings Lebanese officials were taking in DC. “Their reaction was to ask why [is Lebanon] panicking? We told them, well, the perception in Lebanon is that it’s going to be crazy,” Jaber said. Lebanese concern regarding HIFPA implementation is that the law will disrupt the country’s banking sector, blowing up the Lebanese economy in the process, with individuals and businesses that come into contact with Hezbollah, even if not facilitating financial transactions or involved in alleged illicit activities, as collateral casualties.

The Obama Administration has been quick to point out that it is only Hezbollah that the Americans are interested in. Following meetings with US officials, Jaber told Executive that “[The Americans] have no intention of neither hurting the Lebanese economy nor the Lebanese banking sector, nor of targeting any community or religious group. This is about [specific] individuals, entities and companies.” Following his mid-March visit to Washington, Minister of Finance Ali Hassan Khalil stated that Assistant Secretary for Terrorism Financing at the Treasury Department, Daniel Glaser, clearly confirmed “that the regulations will not target the Shiite community or any groups in general.”

The Obama Administration does not want to push Lebanon further toward chaos says Ibrahim Warde, an expert on terrorism financing at Tufts University. According to his reading of the situation, at least some departments in the Administration do not want to instigate a breakdown of Lebanon’s banking sector. “Certainly someone like John Kerry and the State Department institutionally, don’t want to see the collapse of the Lebanese banking sector because they are well aware of the fact that it is one of the few things left standing in Lebanon,” Warde told Executive.

But Congress is taking a much more hardline approach in the lead up to writing the law’s implementation rules. The case being made to Congress by partisan academic experts is that, since the signing of the Iran deal, Hezbollah’s financial latitude to purchase weapons and military technology has expanded. That is, according to testimony in front of the House of Representatives’ Foreign Affairs Middle East and North Africa subcommittee in late March by Matthew Levitt of the Washington Institute for Near East Policy, because the lifting of Iranian sanctions has “Increased Iranian spending… likely to benefit Hezbollah’s regional and international operations.”

Critics of the Iran deal have labored over the question of whether the removal of sanctions would provide more money for terrorist funding – Exhibit A being Hezbollah, Warde told Executive. From his perspective, “The way in which the Obama Administration has tried to deflect that kind of criticism was to go along with [HIFPA] in December… the [Iran deal] had been under very strong attack by the Republicans, Gulf countries and Israel.”

Republican leaders, like Ros-Lehtinen, are pushing to target Hezbollah because the measures will serve as a counterweight to the Iran deal. Republicans as well, especially on the far right, have for a long time questioned Obama’s commitment to Israel. To many voters in the Republican primaries, Obama is considered a Muslim, and his fumbling of the America-Israel alliance, in their view, is part of an Islamic conspiracy to push Israel into the sea. The president has at times publicly feuded with his Israeli counterpart, Benjamin Netanyahu, but Obama has not veered far from US policy norms concerning issues like the Israel-Palestine peace process. Ros-Lehtinen subscribes to this critique of Obama and the narrative has played well among 2016’s Republican presidential candidates.

That HIFPA is politically driven legislation is underscored in small part by the 2016 presidential election cycle in the US. Then Republican presidential candidate Marco Rubio, a key sponsor of the bill in the Senate and one-time protégé of Ros-Lehtinen, had leveraged other important issues, such as immigration, as a way to spring up the political rungs of his career ladder. Rubio’s tendency, as a recent article pointed out in Rolling Stone, an American magazine covering music, pop culture and politics, has been to pursue issues and political alliances that best benefit his quest for power until they don’t.

America’s Arab allies fear that an Iran flush with cash will pursue regional goals more aggressively, leading one Saudi Arabian diplomat to describe the deal as “extremely dangerous,” The Washington Post reported in July 2015. Several sources tell Executive that Saudi Arabia’s decision to pull its $3 billion aid package to Lebanon’s army, the designations of Hezbollah as a terrorist group by the Gulf Cooperation Council and Arab League, as well as recent measures taken by several GCC countries to deport Lebanese nationals because of alleged ties to Hezbollah are designed to show anger over, or to blunt the impact of, sanction lifting.

Criticism by Arab governments that view Iran as competition agree that the Iran deal will enable it to give more aid to its proxies, particularly Hezbollah. More money for Hezbollah, they say, will allow it to increase military capabilities on multiple fronts in the region, strengthen Hezbollah’s alleged terrorism, narcotics and money laundering networks across the globe, and restore and expand social services to its constituency in Lebanon, allowing it to further entrench itself in domestic politics. The position Israel has taken on the Iran deal has been clear for some time: Iran represents an existential threat to the Jewish state with Hezbollah in the position to execute this threat both directly and covertly.

Israeli interests influence think tanks in DC too, Warde says, like the Washington Institute for Near East Policy (WINEP) and the Foundation for Defense of Democracies (FDD). “This constituency has always been quite powerful. It is especially clear whenever you have the experts testifying, it’s always the same names and affiliations – WINEP, FDD – these kinds of groups always send their ‘experts or pseudo-experts’ to just say all sorts of bad things about Hezbollah,” he tells Executive.

Israel has the added weight of supposedly non-partial academic policy organizations with that of pro-Israeli lobby groups. According to opensecrets.org, a website compiling records from the US Senate Office of Public Records, AIPAC was one of the pro-Israel organizations that paid for lobbying in 2014 and 2015 against loosely wording the text of HIFPA. Lebanon had one organization, the Association of Banks in Lebanon, that lobbied on its behalf both years. (The association declined to comment for this article). Organizations like AIPAC hold a lot of weight in Washington, and American leaders often speak in front of it to push their policy agenda or to gain support for political appointees.

When compared with Arab countries and Israel, Lebanon commands exceedingly insignificant influence in Washington. Diplomatic presence – the ambassador retired in December – was described to Executive as “pretty weak” and “not sufficient to do what is required.” MP Alain Aoun said that “the embassy is understaffed for such an important country like the United States. Where many decisions concerning the whole world are taken, we are so underrepresented that we are almost completely absent. One congressman is probably staffed better than our embassy.”

Compared to that of America’s Middle East allies – countries of the Gulf plus Israel – MP Yassine Jaber told Executive that, “We have really been sitting on our butts – if you compare two countries in the region, Lebanon and Jordan, we have more burden fighting terrorism, and vis-à-vis the refugees. But Jordan has a lot more attention, a lot more money, a lot more support because they’re [actively present in Washington],” adding that Lebanon has virtually “no bilateral engagement” with the United States.

The conundrum for Lebanon in all this is its perception in Washington as a problem country because of Hezbollah, an image it has little latitude to alter. Lebanon is underrepresented diplomatically and is outspent in its lobbying efforts. Ultimately, Lebanon has little ability to articulate its position, drowned out by America’s Arab allies plus Israel, on American policy in the Middle East, leaving its national concerns to go virtually unheard.

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